Restaurateurs Nervous About Future In Wake of State Minimum Wage Hike - NBC 7 San Diego

Restaurateurs Nervous About Future In Wake of State Minimum Wage Hike



    Entrepreneurs in San Diego's restaurant industry are still digesting last week's dollar-an-hour hike in the state's minimum wage, crossing their fingers that they won't eventually take a financial hit that’s too hard to absorb.

    In 18 months, California's new $9-an-hour requirement will go to ten bucks an hour.

    But here in San Diego, there could be a citywide minimum of $9.75 by next year, $10.50 by 2016, and $11.50 in 2017.

    Those phased-in levels got preliminary approval from the City Council last month, and are expected to come back for review at a special evening meeting on July 14.

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    Minimum wage hikes are a sore subject for restaurateurs.

    While lobbying in opposition within the political arena, they take pains not to alienate their employees in the media.

    But many insist there's a risk to workers' hours -- and their jobs altogether -- if there's a need for higher prices that diners won't swallow.

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    And some will venture to go on the record in trying to make that case.

    "Going out to eat is an entertainment. It's not a need, it's a want -- people can control their wants,” says Moe Sadighian, managing partner in an ownership group that operates three restaurants in downtown San Diego and another National City’s Bay Marina Drive.

    "You're not going to go out to eat three times a week,” Sadighian told NBC 7 in an interview Tuesday at Goodie’s Bar & Grill, the National City establishment. “You're going to cut it down to one -- or none. So that's going to affect, more than anything, minimum-wage employees in restaurants and hotels."

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    Sadighian said his restaurant group – which also includes The Reef, El Pulpo and Funky Garcia in the Gaslamp Quarter – has a total workforce of120 employees who earn an average of $19 a hour that includes shared tips.

    With smart planning ahead of last week's wage hike, the owners avoided layoffs by shortening some work shifts, and menu prices were kept 'status quo'.

    But the momentum for more wage increases -- which add 35 to 40 cents per dollar in “behind-the-scenes” taxes and workers' comp costs -- is a real concern facing the group's downtown establishments.

    Holding the 'price points' without having to shed jobs figures to be a challenge.

    As Sadighian sees it: “Everything's going to go up. Gas is going to go up, groceries are going to go up. It's dominoes. So tell me, how is this going to get us out of poverty if everybody raises our prices?"

    The partnership has three more restaurants in the planning stages, two in San Diego.

    Sadighian says one of the latter has been put on a back burner until the local industry's economics get a lot clearer.

    If the increases contemplated at San Diego City Hall go through, either by ordinance or at the ballot box, Sadighian fears a worst-case scenario.

    "There are going to be layoffs, I can guarantee it,” he predicts. “The service in the industry is not going to be as good -- as in any industry -- because they're going to have less people working to do twice-as-hard jobs. And it's unfeasible.

    “You're going to have to raise the prices. So with that and the Health Care Act and everything, it's bottlenecking."